Factory output retail sales and facility investment all surrendered ground in October marking the first triple decline since May.
Our correspondent Moon Hye-ryeon covers the latest findings.
South Korea’s economy faced a setback in October, with production, consumption, and investment all declining for the first time in five months.
The data, released by Statistics Korea on Friday, underscores a persistent weakness in domestic demand.
The country’s industrial production index dipped point-three percent from the previous month, marking the second consecutive month of decline after a brief rebound in August.
While manufacturing output increased by point-four percent due to a surge in semiconductor production, other sectors such as the auto sector faced challenges due to factory fires and strikes.
Construction output contracted for the sixth consecutive month, the longest such streak since 2008.
The decline was attributed to a slowdown in both civil engineering and building construction.
Retail sales also fell by point-four percent, marking two straight months of decline.
Although sales of non-durable goods like food and beverages increased, sales of durable goods such as home appliances dropped significantly.
“In October, there was a base effect from September because new telecommunication devices were released and bought that month. Also, the warmer weather this year led to lower sales of home appliances and heating products.”
Meanwhile, facility investment fell by five-point-eight percent month-on-month, largely due to decreased demand for machinery used in semiconductor manufacturing.
This marked the largest decline since January of this year.
This latest data follows the Bank of Korea’s decision to cut the interest rate by another 25 basis points on Thursday – marking the first time in fifteen years that the central bank has lowered the rate twice in a row.
The BOK cited weak domestic demand as a reason behind the rate cut, as lowering the interest rate helps to stimulate economic activity by making borrowing cheaper.
Experts, however, are doubtful about how much of an effect this could have on the country’s declining construction sector.
“Construction investment has been pretty poor for a long period, like three, four years, so I think it is not just because of the interest rate it is a kind of structural problem in the construction industry.”
Going forward, the BOK said it would continue to monitor domestic economic indicators to set the pace for further cuts.
Moon Hye-ryeon, Arirang News.
source : https://www.arirang.com/news/view?id=278506
